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How Chipotle Got to 1,000 Restaurants

The news that Chipotle hit 1,000 stores last week made me flash back a few years, to when fast-casual Mexican restaurants were sprouting up everywhere. All the big fast-food chains owned a brand -- Wendy's (WEN) owned Baja Fresh, McDonald's (MCD) owned Chipotle (CMG), and Jack in the Box (JACK) owned Qdoba (and still does). All these big chains hoped they'd bet on the concept that would become the predominant national fast-Mexican chain, but today 17-year-old Chipotle is on top with growing comparable-store sales, the most units, and big expansion plans for this year. Qdoba has around 500 units and Baja Fresh has less than 300.

How did Chipotle come out on top in the fast-Mexican wars? A look at the philosophy that made them stand out:

  • Be different. From early on, Chipotle founder Steve Ells was interested in setting the chain apart with a focus on naturally raised pork and chicken. While the other chains were about fresh food -- no lard, no MSG -- Chipotle took the healthy concept a step further.
  • Keep improving. In recent years, Chipotle has driven its healthy-food concept further, into organic food and local sourcing of its ingredients. Though it's a huge challenge for large chains to source locally near their far-flung stores, the chain is up to 35 percent locally sourced food and growing.
  • Survive the corporate environment. It's often not easy being a small division of a major corporation. Of the three chains, Chipotle seemed to fare best under big-chain ownership. McDonald's gave them plenty of money for expansion, but eventually spun them off in an IPO because their real-estate costs were a drag on earnings.
  • Care about your culture. Chipotle managers describe their company culture as unique. There's a big focus on rewarding employees -- 90 percent of company managers have been promoted from restaurant crews.
  • Recognize your best people. Chipotle created a program to elevate the status of high-performing managers. Its Restaurateur program now includes nearly 170 managers, who oversee about one-third of all the chain's restaurants.
  • Love your fans. This brand has cultivated an audience of rabid fans, and the company actively engages with them and rewards them. There's even a tab on their Web site called "Fan-antics," dedicated to chronicling their fans' weddings in Chipotle stores and other stunts involving the chain's burritos. This buzz makes their stores highly anticipated. The Olathe, Kan., photographer of the planned new Chipotle restaurant pictured above labeled the photo, "It is pretty much one of the greatest days ever in south Olathe."
Photo via Flickr user ishane